Last week was a mixed one for the telecom sector. Cable multi-service operators Comcast Corp. (CMCSA) and Cablevision Systems Corp. (CVC) reported better-than-expected financial results for the fourth quarter of 2014. In spite of the stellar performance, Cablevision Systems lost a large number of video, high-speed data and voice customers while Comcast gained impressive numbers of high-speed data and voice customers along with a few video customers.
On the satellite TV front, DIRECTV reported robust financial numbers while DISH Network Corp. (DISH) reported mixed results. DIRECTV continues to gain massive subscribers in both the U.S. and Latin America while DISH lost a large number of customers in the fourth quarter. Meanwhile, leading rural local exchange carrier in the U.S., Windstream Holdings Inc. (WIN) also reported mixed financial results for the quarter. The company lost a large number of voice and high-speed Internet customers.
Recap of the Week’s Most Important Stories
1. Comcast reported mixed financial results for the fourth quarter of 2014. The company’s net earnings met the Zacks Consensus Estimate while total revenue outpaced the same. Quarterly adjusted earnings per share of 77 cents were exactly in line with the Zacks Consensus Estimate.
Total revenue stood at $17,732 million, up 4.8% year over year and also above the Zacks Consensus Estimate of $17,678 million. The company added a net of 375,000 High-Speed Internet customers compared with 379,000 in the year-ago quarter. Similarly, it gained 123,000 Voice customers against 227,000 in the prior-year quarter. It also gained 6,000 video subscribers compared with 46,000 in the year-ago quarter. (Read More: Comcast Q4 Earnings in Line, Revenues Beat Estimates.)
2. Cablevision Systems reported strong financial results in the fourth quarter of 2014 with both the top and the bottom line surpassing the respective Zacks Consensus Estimate. Fourth-quarter adjusted earnings per share of 20 cents were above the Zacks Consensus Estimate of 19 cents.
Total revenue in the fourth quarter came in at $1,631 million, up 3% year over year and also above the Zacks Consensus Estimate of $1,627 million. In the final quarter of 2014, the company lost 34,000 video subscribers, 4,000 high-speed data users and 11,000 voice customers. (Read More: Cablevision Beats Q4 Earnings and Revenue Estimates.)
3. DIRECTV posted fourth-quarter 2014 financial results wherein both its top and bottom line surpassed the Zacks Consensus Estimate. Quarterly earnings per share of $1.53, better than the Zacks Consensus Estimate of $1.39. Total revenue came in at $8,922 million, up 3.8% year over year and also ahead of the Zacks Consensus Estimate of $8,908 million.
In the U.S. segment, net subscriber additions were 149,000 compared with 93,000 in the year-ago quarter. In the Latin America segment, net subscriber additions were 118,000 compared with 231,000 in the year-ago quarter. (Read More: DIRECTV Tops Q4 Earnings, Revenues on Customer Gains.)
4. DISH Network declared mixed financial numbers for the fourth quarter of 2014 wherein earnings surpassed the Zacks Consensus Estimate while revenues missed the same. Quarterly earnings per share of 88 cents surpassed the Zacks Consensus Estimate of 43 cents. Quarterly total revenue stood at approximately $3,681.7 million, up 4% year over year but below the Zacks Consensus Estimate of $3,704 million.
At the end of the fourth quarter of 2014, DISH Network had approximately 13.978 million pay-TV subscribers against 14.057 million at the end of 2013. The company lost 63,000 pay-TV subscribers in the reported quarter compared with a net gain of 8,000 subscribers in the year-ago quarter. (Read More: DISH Network Beats Q4 Earnings, Lags Revenue Estimates.)
5. Windstream Holdings reported mixed financial results for the fourth quarter of 2014. Quarterly adjusted earnings per share of 3 cents were exactly in line with the Zacks Consensus Estimate. Pro forma revenues decreased 3% year over year to $1,443.1 million in the fourth quarter and also fell short of the Zacks Consensus Estimate of $1,456 million.
Total Service revenues fell 2% to $1.400.6 million while Product revenues declined 23% year-over-year to $42.5 million. In the reported quarter, Windstream lost 259,000 voice lines and 10,400 high-speed Internet customers. At the end of 2014, the company had 1.6146 million voice lines, 1.1316 million high-speed Internet customers and 0.3853 million digital TV customers. (Read More: Windstream Q4 Earnings Meet Estimate, Revenues Miss.)
Price Performance
The following table shows the price movement of major telecom players over the past week and the last six months.
|
Company |
Last Week |
Last 6 Months |
|
VZ |
+0.53% |
+2.41% |
|
T |
-0.81% |
+1.88% |
|
S |
-0.40% |
-11.11% |
|
TMUS |
+3.84% |
+10.13% |
|
VOD |
-0.72% |
+2.76% |
|
CHL |
+0.00% |
+13.43% |
|
AMX |
-2.69% |
-9.71% |
|
CMCSA |
+2.40% |
+9.98% |
|
DISH |
+1.31% |
+19.98% |
Over the last five trading sessions, the share price movement of most of the major telecom stocks was mixed. T-Mobile US Inc. (TMUS) gained the maximum value whereas America Mobile SAB (AMX) lost the most. Meanwhile, over the last six months, the price performance of key telecom stocks was predominantly positive. DISH and China Mobile Ltd. (CHL) gained a considerable 19.98% and 13.43% respectively. Conversely, Sprint Corp. (S) lost 11.11% over the same time frame.
What’s Next in the Telecom Sector?
On Feb 6, 2015, the Federal Communications Commission (FCC) chairman Mr. Tom Wheeler proposed new net neutrality laws which will classify high-speed broadband (Internet) as a public utility under Title II of the 1934 Communications Act instead of section 706 of the 1996 Telecom Act. The five-member regulatory body will vote on this proposal in the coming week. Investors will closely monitor the final outcome as the reclassification will allow the government to strongly regulate Internet Service Providers.
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